Just when you thought Keynesian economics was finally dead among Republicans, Mitt Romney announces two prominent New Keynesian academics, Greg Mankiw and Glenn Hubbard, as the heart of his economic team. So if you loved how Obama has managed to continue the flawed economics of the Bush administration*, you’ll feel pretty safe with Romney.
Sadly the real problem goes beyond Romney and Obama. The financial crisis and the government’s response to it illustrate the failure of much of mainstream macroeconomics. Yes, the Romney team would have had its stimulus proposal tilted more toward temporary tax cuts, but it still would have made efforts at government fine-tuning of the economy. In the grand scheme of things, there is not a dime’s worth of difference between Mankiw, Bernanke, and Romer.
Romney’s announcement does, however, give the other Republican candidates an opportunity to appoint someone outside the failed New Keynesian consensus that rules macroeconomics.
*In the interest of full disclosure: I spent 11 months with the Bush administration, leaving once I figured how there was no real commitment to free markets.